Companies lose registration for failing to file statutory papers for 3 yrs
The government has cancelled the registration of close to 55,000 companies for not filing statutory documents like annual returns for three consecutive years.
By Gireesh Chandra Prasad, TNN |
NEW DELHI: The government has cancelled the registration of close to 55,000 companies for not filing statutory documents like annual returns for three consecutive years. Another 70,000 companies are at the risk of losing their legal standing shortly. However, the claims of lenders will be valid for two decades.
The companies are facing a government drive to clean up the regulatory system of less active companies. These are companies which are lax in regulatory obligations and are different from the shell companies that corporate houses open for strategic purposes. Shell companies usually comply with legal requirements even though they may not carry out business. Under the law, non-compliance is an offence, not doing business is not.
Corporate affairs minister Prem Chand Gupta, who ordered the clean up drive three years ago, told ET the movement will continue. ���Unburdening the system and getting rid of companies that exist only on paper is one of our focus areas,��� the minister said.
The companies are facing a government drive to clean up the regulatory system of less active companies. These are companies which are lax in regulatory obligations and are different from the shell companies that corporate houses open for strategic purposes. Shell companies usually comply with legal requirements even though they may not carry out business. Under the law, non-compliance is an offence, not doing business is not.
Corporate affairs minister Prem Chand Gupta, who ordered the clean up drive three years ago, told ET the movement will continue. ���Unburdening the system and getting rid of companies that exist only on paper is one of our focus areas,��� the minister said.
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After the government issued notices to 1.7 lakh companies to cancel their registration under Section 560 of the Companies Act, 2,500 companies started filing financial statements with the registrar of companies. Of the 54,883 companies that are now removed from government records as in January 2008, the maximum number is from the eastern region which accounted for 24,000 companies, followed by north which accounted for 20,000 companies.
The process of removing the remaining 70,000 companies from official records is expected to be completed soon.
The drive to deregister less active companies was started after giving them two chances of voluntary winding up. Around 30,000 companies availed the simplified exit scheme launched in 2003 while 25,000 companies went for it when another scheme was launched in 2005.
The drive is to remove less active companies from the system so that others could be provided efficient online services.
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